Shri Rampratap S. Ghasoliya, Navsari V. The Pr. CIT, Valsad

ITA 1266/AHD/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7786 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 24-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S T BIDARI
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Principle of natural justice; Assessment record; Set aside; Capital Gains
• Section: 45(2); 143(3); 50C; 142(1); 13; 22; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ITA NO.1266/AHD/2017 ( [ [ / ASSESSMENT YEAR: (2012-13) (VIRTUAL COURT HEARING) RAMPRATAP S. GHASOLIYA 20-B, ADARSH NAGAR SOCIETY, GREED SOCIETY, KALIAWADI, NAVSARI 396445 VS. PRINCIPAL COMMISSIONER OF INCOME-TAX, VALSAD 301, PALAK ARCADE, SHANTI NAGAR, TITHAL ROAD, VALSAD 396001 ./ ./ PAN/GIR NO.: AAOPG5099F (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI MEHUL R. SHAH, CA RESPONDENT BY : SHRI S. T. BIDARI CIT.DR / DATE OF HEARING : 16/07/2021 /DATE OF PRONOUNCEMENT : 23/08/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: BY WAY OF THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE IMPUGNED ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, VALSAD, (IN SHORT LD. PCIT) UNDER SECTION 263 OF THE INCOME TAX ACT, 1961, (IN SHORT THE ACT) DATED 27.03.2017. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE, IN THIS APPEAL IS THAT LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, HAS ERRED IN PASSING THE ORDER UNDER SECTION 263 OF THE ACT, ALTHOUGH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THE FACTS OF THE CASE, WHICH CAN BE STATED QUITE SHORTLY ARE AS FOLLOWS: THE ASSESSEE BEFORE US IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 12.09.2012 DECLARING TOTAL INCOME OF RS.14,67,640/-. THE ASSESSEE`S CASE WAS SELECTED FOR PAGE | 2 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA SCRUTINY UNDER CASS AND THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS FRAMED ON 26.02.2015, DETERMINING THE TOTAL INCOME OF RS.15,65,860/-. 4.LATER, THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, (IN SHORT LD.PCIT), HAS EXERCISED HIS JURISDICTION UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. THEREFORE, A NOTICE U/S 263 OF THE ACT, DATED 10.03.2017, WAS ISSUED TO THE ASSESSEE, WHICH IS REPRODUCED BELOW: TO, SHRI RAMPRATAP S. GHASOLIYA, 20-B, AADARSH NAGAR SOCIETY, GREED ROAD, KALIAWADI, NAVSARI-396445 SUB:- NOTICE U/S. 263 OF THE I.T. ACT, 1961 IN YOUR CASE I.E. SHRI RAMPRATAP S. GHASOLIYA, (PAN:- AAOPG5099F) FOR A.Y. 2012-13-REG. 2.IN THIS CASE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 12.09.2012 DECLARING TOTAL INCOME OF RS. 14,67,640/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT U/S 143(3) WAS PASSED ON 26.02.2015 DETERMINING THE TOTAL INCOME OF RS. 15,65,860/-. 3.THE AO I.E. ITO, WARD-4, NAVSARI AND THE RANGE HEAD I.E. JT. CIT, NAVSARI RANGE, NAVSARI, VIDE THEIR LETTERS DATED 28.02.2017 AND 08.03.2017, RESPECTIVELY HAVE PROPOSED THAT THE ASSESSMENT ORDER IN THIS CASE IS ERRONEOUS AS WELL PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE, THE SAME SHOULD BE REVISED U/S 263 OF THE I.T. ACT, 1961. 4.AFTER GOING THROUGH THE REPORT OF THE AO, THE RANGE HEAD AND EXAMINATION OF THE ASSESSMENT RECORD OF THE AO, IT IS SEEN THAT THE ASSESSMENT FRAMED BY THE ITO, WARD-4, NAVSARI SUFFERS FROM FOLLOWING ERRORS/MISTAKES WHICH MAKE IT NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF THE FOLLOWING:- (I)THE AO HAS NOT CARRIED OUT THE REQUISITE INQUIRIES REGARDING THE VALUATION OF THE PROPERTY AS PER THE CIRCLE RATE/STAMP DUTY RATE IN RESPECT OF THE PLOT OF LAND SOLD DURING THE YEAR. THE ASSESSEE HAS DECLARED THE SALE CONSIDERATION OF RS.60,00,000/- AS AGAINST THE VALUATION OF RS.1,69,26,000/-AS PER THE STAMP DUTY/CIRCLE RATES. THEREFORE, THE APPLICABILITY OF PROVISIONS OF SECTION 50C WHICH IS PRIMA FACIE AND CLEARLY ATTRACTED IN THIS CASE, HAS NOT BEEN EXAMINED BY THE AO (II)IT IS FURTHER SEEN THAT THE ASSESSEE HAS CLAIMED TO HAVE CONVERTED THE SAID IMMOVABLE PROPERTY INTO STOCK IN TRADE IN F.Y. 2010-11 I.E. A.Y. 2011-12. THEREFORE, AS PER THE PROVISIONS OF SECTION 45(2), THE CAPITAL GAINS ARISING AT OF SAID CONVERSION WERE REQUIRED PAGE | 3 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA TO BE TAXED IN THE YEAR OF CONVERSION OF THE CAPITAL ASSET INTO STOCK- IN-TRADE. THE FAILURE IS THE AO TO TAKE NECESSARY ACTION IN THE RELEVANT NECESSARY ACTION MAKES THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. (III) PERUSAL OF THE ASSESSMENT RECORD FOR THIS ASSESSMENT YEAR SHOWS THAT THE ASSESSEE HAS SHOWN CONTRACT INCOME OF RS.60,00,000/- AND HAS ALSO CLAIMED EXPENSES UNDER VARIOUS HEADS. IN REALITY, AS CAN BE SEEN FROM THE DETAILS ON RECORD, THESE ARE NOT CONTRACT RECEIPT BUT THE SALE CONSIDERATION RECEIVED ON TRANSFER OF THE SAID PLOT OF LAND. THE FAILURE OF THE AO TO MAKE INQUIRIES ABOUT THE VALIDITY OF THE CLAIM, WHICH IS PRIMA-FACIE WRONG AND AGAINST THE FACTS AS AVAILABLE ON RECORD, MAKES THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 6.YOU ARE, THEREFORE, REQUIRED TO SHOW-CAUSE AS TO WHY THE SAID ASSESSMENT ORDER BE NOT REVISED BY INVOKING THE PROVISIONS OF 263 OF I. T. ACT, 1961. THE HEARING IN YOUR CASE IS BEING FIXED ON 17.03.2017 AT 11.30 A.M. PLEASE NOTE THAT THE REQUIRED DETAILS SHOULD BE SUBMITTED AFTER NUMBERING THE DOCUMENTS ENCLOSED AND INDEXING THE SAME IN THE FORWARDING/COVERING LETTER. 7.PLEASE NOTE THAT THE REQUIRED DETAILS SHOULD BE SUBMITTED AFTER NUMBERING THE DOCUMENTS ENCLOSED AND INDEXING THE SAME IN THE FORWARDING/COVERING LETTER. YOU CAN ATTEND THE HEARING EITHER PERSONALLY OR THROUGH YOUR DULY AUTHORIZED REPRESENTATIVE OR CAN FILE WRITTEN SUBMISSIONS ON OR BEFORE THE STIPULATED DATE AND TIME OF HEARING. [SATBIR SINGH] PR. COMMISSIONER OF INCOME TAX, VALSAD' 4. IN RESPONSE TO THE ABOVE SHOW CAUSE NOTICE, THE ASSESSEE HAS SUBMITTED ITS REPLY ON 23.03.2017 BEFORE THE LD PCIT( VIDE PAPER BOOK PAGE NO.1). HOWEVER, THE LEARNED PCIT DID NOT CONSIDER ASSESSEES REPLY AND PASS THE ORDER UNDER SECTION 263 OF THE ACT. THE LD PCIT OBSERVED THAT ASSESSING OFFICER HAS FAILED TO MAKE REQUISITE INQUIRIES ABOUT THE VALUATION OF PROPERTY AS PER CIRCLE RATE /STAMP DUTY RATE, IN RESPECT OF THE PLOT SOLD, THAT IS, THE APPLICABILITY OF THE PROVISIONS OF THE SECTION 50C, HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. THE CAPITAL GAINS ARISING ON CONVERSION OF THE IMMOVABLE PROPERTY, AS PER THE PROVISION OF SECTION 45(2) OF INCOME TAX ACT, HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. BESIDES, THE ASSESSEE IS FOUND TO HAVE SHOWN CONTRACT AMOUNT OF RS.60,00,000/- AND HAS CLAIMED EXPENSES UNDER VARIOUS HEADS. THE AO HAS FAILED TO MAKE THE REQUISITE INQUIRIES ABOUT THIS ISSUE. PAGE | 4 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA 5. IN VIEW OF THE ABOVE, THE LD PCIT HELD THAT ORDER OF THE ASSESSING OFFICER, DATED 26.02.2015, FRAMED UNDER SECTION 143(3) OF THE ACT, IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, LD PCIT HAS SET ASIDE THE ORDER OF ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT ORDER AFTER MAKING DETAILED INQUIRIES ON THE ISSUES MENTIONED HEREINABOVE. 6. AGGRIEVED BY THE ORDER OF LEARNED PCIT, THE ASSESSEE IS IN APPEAL BEFORE US. 7. SHRI MEHUL R. SHAH, LEARNED COUNSEL FOR THE ASSESSEE, PLEADS THAT DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER HAS EXAMINED THE ISSUES RAISED BY THE LD PCIT IN HIS ORDER UNDER SECTION 263 OF THE ACT, AND ASSESSEE HAS SUBMITTED ITS REPLY BEFORE THE ASSESSING OFFICER AND THEREAFTER, THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER SHOULD NOT BE ERRONEOUS. THE LEARNED COUNSEL SUBMITS THAT AO HAS ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT, DATED 22 ND JULY, 2014 WHEREIN, VIDE POINT NOS. 18 AND 19 (SEE PAPER BOOK PAGE NO.16), THE ASSESSING OFFICER HAS ASKED, THE ASSESSEE TO FURNISH THE COMPLETE DETAILS OF CLOSING STOCK AND DETAILS OF IMMOVABLE PROPERTY OF RS.1,69,26,000/-. IN RESPONSE TO NOTICE UNDER SECTION 142(1) OF THE ACT, THE ASSESSEE SUBMITTED REPLY, VIDE ITS LETTER DATED 19 TH AUGUST, 2014 (VIDE PAPER BOOK PAGE NO.13). THEREFORE, THE ISSUE RAISED BY THE LEARNED PCIT HAVE ALREADY BEEN EXAMINED BY THE LEARNED ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDINGS AND HENCE, THE ORDER PASSED BY THE AO SHOULD NOT BE ERRONEOUS. THEREFORE, LD COUNSEL PRAYED THE BENCH THAT ORDER PASSED BY THE LD PCIT MAY BE QUASHED. 8. ON THE OTHER HAND, SHRI S. T. BIDARI, LEARNED DR FOR THE REVENUE RELIED ON THE FINDINGS OF LEARNED PCIT. 9. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACTS OF THE CASE INCLUDING THE FINDINGS OF PAGE | 5 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA THE LD PCIT AND OTHER MATERIALS BROUGHT ON RECORD. WE NOTE THAT LD PCIT, IN HIS ORDER UNDER SECTION 263 OF THE ACT, HAS RAISED THE FOLLOWING ISSUES: (1).THE AO HAS FAILED TO MAKE REQUISITE INQUIRIES ABOUT THE VALUATION OF PROPERTY AS PER CIRCLE RATE /STAMP DUTY RATE, IN RESPECT OF THE PLOT SOLD. THE ASSESSEE IS FOUND TO HAVE DECLARED SALE CONSIDERATION OF RS.60,00,000/- AS AGAINST THE VALUATION OF RS.1,69,26,000/- AS PER THE STAMP DUTY/CIRCLE RATES. THEREFORE, THE APPLICABILITY OF THE PROVISIONS OF THE SECTION 50C, WHICH IS PRIMA FACIE ATTRACTED IN THIS CASE, HAVE NOT BEEN EXAMINED BY THE ASSESSING OFFICER. (2). THE ASSESSEE IS FOUND TO HAVE CONVERTED THE SAID IMMOVABLE PROPERTY INTO STOCK-IN-TRADE IN F.Y. 2010-11 I.E. A.Y.2011-12. THEREFORE, THE CAPITAL GAINS ARISING ON CONVERSION OF THE IMMOVABLE PROPERTY SHOULD HAVE BEEN BROUGHT TO TAX IN THE YEAR OF CONVERSION AS PER THE PROVISION OF SECTION 45(2) OF INCOME TAX ACT, 1961. (3).THE ASSESSEE IS FOUND TO HAVE SHOWN CONTRACT AMOUNT OF RS.60,00,000/- AND HAS CLAIMED EXPENSES UNDER VARIOUS HEADS. EXAMINATION OF RECORDS SHOW THAT THESE ARE NOT CONTRACT RECEIPTS BUT SALE CONSIDERATION RECEIVED ON TRANSFER OF SAID IMMOVABLE PROPERTY. THE ASSESSING OFFICER HAS FAILED TO MAKE THE REQUISITE INQUIRIES ABOUT THIS ISSUE. 10. SO FAR THE FIRST ISSUE IS CONCERNED, WHICH RELATES TO SALE CONSIDERATION OF THE PROPERTY OF RS.60,00,000/-, AS AGAINST THE VALUATION OF RS.1,69,26,000/- AS PER THE STAMP DUTY CIRCLE RATE. WE NOTE THAT THE SAID ISSUE RAISED BY THE LD PCIT, HAS BEEN EXAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. WE OBSERVED THAT ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT, DATED 22 ND JULY 2014, (VIDE PB-14), WHEREIN HE HAS ASKED THE ASSESSEE TO FURNISH THE FOLLOWING: 19. YOU HAVE SOLD ONE IMMOVABLE PROPERTY FOR RS. 1,69,26,000/- AS PER INFORMATION AVAILABLE WITH THIS OFFICE. YOU ARE REQUESTED TO FURNISH COPY OF SALE DEED AND COMPUTATION OF CAPITAL GAIN. PAGE | 6 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA THEREFORE, WE NOTE THAT ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FILE THE SALE DEED AND COMPUTATION OF CAPITAL GAIN IN RESPECT OF IMMOVABLE PROPERTY OF RS.1,69,26,000/-, THEREFORE, IT IS EVIDENTLY CLEAR THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS RAISED THE QUERY AND THE ASSESSEE HAS FURNISHED ITS REPLY BY LETTER DATED 19 TH AUGUST, 2014, VIDE PAPER BOOK PAGE NO.13, WHEREIN THE ASSESSEE HAS REPLIED THE QUERY OF THE ASSESSEE, STATING AS FOLLOWS: 18.I AM TRADING IN OPEN LAND, ATTACHED COPY OF OPENING STOCK & CLOSING STOCK DETAILS. 19.I HAVE SOLD ONE IMMOVABLE PROPERTY OF RS.60,00,000/- WHICH IS SHOWN IN MY TRADING ACCOUNT AS SALES, AS I AM TRADING IN OPEN LAND AND IT CONSIDER AS BUSINESS INCOME HENCE NO CAPITAL GAIN. ATTACHED SALE DEED OF THIS OPEN LAND. FROM THE ABOVE QUESTION AND ANSWER, BETWEEN ASSESSING OFFICER AND ASSESSEE ABOUT THE COMPUTATION OF CAPITAL GAIN IN RESPECT OF IMMOVABLE PROPERTY OF RS.1,69,26,000/-, IT IS PROVED BEYOND DOUBT THAT ASSESSEE HAS REPLIED THE QUERIES ASKED BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER AFTER GETTING THE DETAILS FROM THE ASSESSEE, APPLIED HIS MIND AND FRAMED ORDER UNDER SECTION143(3) OF THE ACT, DATED 26.02.2015. THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER SHOULD NOT BE ERRONEOUS. 11. ABOUT THE SECOND ISSUE RAISED BY THE LD.PCIT, WHICH RELATES TO CONVERSION OF THE IMMOVABLE PROPERTY INTO STOCK-IN-TRADE IN F.Y. 2010-11 I.E. A.Y.2011-12. WE NOTE THAT DURING THE ASSESSMENT STAGE, THE ASSESSING OFFICER HAD HIMSELF EXAMINED THE DETAILS OF OPENING STOCK AND CLOSING STOCK, WHICH IS EVIDENT FROM THE ORDER OF THE ASSESSING OFFICER, PASSED UNDER SECTION 143(3) OF THE ACT, DATED 26.02.2015, WHEREIN THE AO HAS EXAMINED THE SAID ISSUE AS FOLLOWS: [2].IN RESPONSE TO THE SAID NOTICE, SHRI DAXESH GANDHI, ACCOUNTANT, DULY AUTHORIZED, ATTENDED FROM TIME TO TIME AND FURNISHED THE DETAILS CALLED FOR. THE DETAILS FURNISHED HAVE BEEN VERIFIED AND PLACED ON RECORD. BOOKS OF ACCOUNTS PRODUCED HAVE BEEN EXAMINED ON TEST CHECK BASIS. THE CASE WAS DISCUSSED WITH HIM. [3]THE ASSESSEE DERIVES INCOME FROM BUSINESS OF CONTRACTOR. PAGE | 7 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA [4]ON GOING THROUGH THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, IT IS NOTICED THAT THE ASSESSEE HAS SHOWN OPENING STOCK AMOUNTING TO RS.56,80,077/- WHEREAS IT IS SEEN FROM THE RETURN OF INCOME FILED FOR THE A.Y.2011-12, THE ASSESSEE HAS SHOWN CLOSING STOCK OF RS.56,60,713/-. THUS, DIFFERENCE COMES OF RS.19,364/-. ON BEING ASKED THE A.R. OF THE ASSESSEE, VIDE ORDER SHEET ENTRY, DATED 18.02.2015 REGARDING DIFFERENCE OF RS.19,364/-, THE A.R. OF THE ASSESSEE HAS SUBMITTED PENALTY ORDER NO.CH/NA/SHARATBHANG/CASE NO. 1/2005 DATED 15.06.2010 PASSED BY THE COLLECTOR, NAVSARI. THE AFORESAID PENALTY HAS BEEN PAID BY THE ASSESSEE AND ADDED INTO THE VALUE OF CLOSING STOCK, WHICH IS NOT ALLOWABLE. THE A.R, OF THE ASSESSEE OFFERED NO OBJECTION IN THIS REGARD AND HENCE AN AMOUNT OF RS. 19,364/- IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 12. APART FROM THIS, THE ASSESSING OFFICER HAS ASKED THE DETAILS BY ISSUING NOTICE UNDER SECTION 142(1) OF THE ACT. THE RELEVANT PARA OF THE NOTICE UNDER SECTION 142(1) OF THE ACT, IS REPRODUCED BELOW: 18. PLEASE PROVIDE COMPLETE DETAILS OF CLOSING STOCK IN TERMS OF QUANTITY AND VALUE ALONG WITH BASIS OF VALUATION FOR AY 2011-12 AND DETAILS OF OPENING STOCK FOR AY 2012-13 THEREFORE, IT IS CLEAR THAT DURING THE ASSESSMENT STAGE, THE AO HAS EXAMINED THE ISSUE RAISED BY THE PCIT, ABOUT THE CONVERSION OF THE IMMOVABLE PROPERTY INTO STOCK-IN-TRADE IN F.Y. 2010-11 I.E. A.Y.2011-12. WE NOTE THAT WHEN TRANSFERRED ASSET WAS HELD AS STOCK IN TRADE, IN THAT SITUATION, SECTION 50C WOULD NOT APPLY, AS HELD BY HON`BLE GUJARAT HIGH COURT IN THE CASE OF MUKESH & KISHOR BAROT CO- OWNERS, 33 TAXMANN.COM 87 (GUJ). HENCE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 13. SO FAR THE THIRD ISSUE IS CONCERNED, WHEREIN THE ASSESSEE IS FOUND TO HAVE SHOWN CONTRACT AMOUNT OF RS.60,00,000/- AND HAS CLAIMED EXPENSES UNDER VARIOUS HEADS. THE LD PCIT NOTICED THAT THESE ARE NOT CONTRACT RECEIPTS BUT SALE CONSIDERATION RECEIVED ON TRANSFER OF SAID IMMOVABLE PROPERTY. THEREFORE, LD PCIT HELD THAT ASSESSING OFFICER HAS FAILED TO MAKE THE REQUISITE INQUIRIES ABOUT THIS ISSUE. WE NOTE THAT DURING THE ASSESSMENT STAGE, THE ASSESSING OFFICER HAD VERIFIED THIS ISSUE. THE ASSESSING OFFICER, (VIDE HIS NOTICE UNDER SECTION 142(1) OF THE ACT), HAS PAGE | 8 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA ASKED THE ASSESSEE TO FURNISH DETAILS OF EXPENSES, TRADING ACCOUNT, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ETC. THE ASSESSING OFFICER HAS EXAMINED THE NATURE OF AMOUNT OF RS.60,00,000/-, THEREFORE, ORDER PASSED BY HIM UNDER SECTION 143(3) OF THE ACT, IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 14. WE NOTE THAT HONBLE APEX COURT IN MALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 83(SC), WHEREIN THEIR LORDSHIP HAVE HELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISDICTION U/S 263 OF THE ACT BY THE CIT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSESSING OFFICER MUST BE ERRONEOUS AND SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE FOLLOWING CIRCUMSTANCES, THE ORDER OF THE AO CAN BE HELD TO BE ERRONEOUS ORDER, THAT IS (I) IF THE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT ASSUMPTION OF FACT; OR (II) INCORRECT APPLICATION OF LAW; OR (III)ASSESSING OFFICERS ORDER IS IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE; OR (IV) IF THE ORDER IS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND; (V) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM; THEN THE ORDER PASSED BY THE ASSESSING OFFICER CAN BE TERMED AS ERRONEOUS ORDER. COMING NEXT TO THE SECOND LIMB, WHICH IS REQUIRED TO BE EXAMINED AS TO WHETHER THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE. WHEN THIS ASPECT IS EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (SUPRA) HELD THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THEIR LORDSHIP HELD THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS TO THE REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. PAGE | 9 ITA NO.1266/AHD/2017 FOR A.Y. 2012-13 RAMPRATAP S. GHASOLIYA 15. TAKING NOTE OF THE AFORESAID DICTUM OF LAW LAID DOWN BY THE HONBLE APEX COURT, LET US EXAMINE THE ASSESSEE`S FACTS. WE NOTE THAT IN ASSESSEE`S CASE, LD PCIT HAS RAISED THREE ISSUES IN HIS ORDER UNDER SECTION 263 OF THE ACT. ABOUT THESE THREE ISSUES, WE HAVE ALREADY DISCUSSED THE FACTS IN PARA NOS. 9 TO 13 OF THIS ORDER AND NOTED THAT ASSESSING OFFICER HAS RAISED QUESTIONS BY ISSUING NOTICE UNDER SECTION 142(1) OF THE ACT AND ASSESSEE HAS REPLIED, THESE QUESTIONS ALONG WITH EVIDENCES. THE ASSESSING OFFICER HAS EXAMINED THE EVIDENCES AND APPLIED HIS MIND AND THEN AFTER HE FRAMED THE ORDER UNDER SECTION 143(3) OF THE ACT, THEREFORE, WE ARE OF THE VIEW THAT ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. SINCE, WE FIND THAT THE ASSESSING OFFICER HAS MADE ENQUIRIES AND THE ACTION OF ASSESSING OFFICER IN ACCEPTING THE CLAIM OF ASSESSEE, AFTER DETAILED ENQUIRY, IS A PLAUSIBLE VIEW, SO , WE DO NOT FIND THAT THE TWIN CONDITIONS REQUIRED FOR EXERCISING THE JURISDICTION U/S 263 OF THE ACT IS FOUND MISSING /ABSENT AND, THEREFORE, THE LD. PCIT OUGHT NOT TO HAVE EXERCISED HIS REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT AND, THEREFORE, WE CANCEL THE IMPUGNED REVISIONAL ORDER DATED 27.03.2017 OF THE LD. PCIT. THEREFORE, WE ARE INCLINED TO ALLOW THE APPEAL OF THE ASSESSEE. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED ON 23/08/2021 BY PLACING RESULT ON NOTICE BOARD. S SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT / / DATE: 23/08/2021 / SKS COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER // TRUE COPY // / / TRUE COPY / / ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT